Story highlights

Greece's top administrative court has ruled that a referendum asking voters whether or not they support bailout demands of creditors can go ahead, rejecting a challenge by two individuals.

The petitioners, one of them a former judge on the Council of State, the court that decided on the case, had argued the plebiscite for Sunday violated the constitution by asking citizens to decide a "public finances" question.

Their challenge had also insisted the question was couched in technical language which could confuse voters.

One Minute Greek Debt Crisis

Prime Minister Alexis Tsipras is advocating a "No" vote, saying a "No" vote will put it in a better bargaining position and help Greece win a new deal with the eurozone's rescue mechanism that would include terms to make the country's $355bn national debt sustainable.

European officials say a "No" vote could lead to the country's exit from the eurozone.

Meanwhile, the eurozone's rescue fund, Greece's largest creditor, officially declared that Greece was in default, saying it reserved the right to call in 130.9bn euros in debt ahead of schedule after Athens failed to pay an International Monetary Fund (IMF) loan.

No immediate payments

The European Financial Stability Facility (EFSF) statement added that it had decided to not immediately demand repayment of its loans, a step that might have triggered Greece's sudden exit from the eurozone.

Both camps have been holding rallies ahead of vote on Sunday [Reuters]

"This event of default is cause for deep concern," Klaus Regling, the EFSF's chief executive, said in the fund's statement.

"It breaks the commitment made by Greece to honour its financial obligations to all its creditors and it opens the door to severe consequences for the Greek economy and the Greek people."

On June 30, Greece failed to pay 1.6bn euros due to the IMF, a non-payment which could "constitute an event of default for certain EFSF loans," the EFSF said in a statement on July 1.

Future actions will be decided with eurozone states, the European Commission and the IMF.

The board of directors of the EFSF is composed of deputy finance ministers and senior officials of eurozone states.

After being incorporated in June 2010, the EFSF has issued bonds to provide loans to countries in financial difficulties.

From July 2013 it was subsumed into the eurozone's permanent bailout fund, the European Stability Mechanism (ESM), also based in Luxembourg and headed by Regling. The EFSF does not provide financial assistance to further countries anymore.

Cash running short in Greece

Greeks are almost evenly split over this weekend's referendum, with 41.5 percent saying they will vote in favour of accepting the latest bailout proposals and 40.2 percent saying they will vote "No", an opinion poll shows.

Friday's poll, conducted by ALCO for To Ethnos newspaper, showed that 10.9 percent remained undecided, while the rest said they would abstain or leave their ballots blank. The difference between the "Yes" and "No" votes is well within the margin of error, leaving any outcome possible.

The poll, which interviewed 1,000 people nationwide, on June 30-July 1 and has a margin of error of 3.1 percent.

The IMF on Thursday warned that Greece needs $55bn and massive debt relief over the next three years to stabilise its finances. It said that Greece's finances have deteriorated because Athens has been slow in enacting economic reforms.